Foreign programming rises while broadcasters face largest drop in advertising revenue in 45 years

Canadian conventional broadcasters spent 59 per cent of their programming expenses, or $846.3-million, on foreign programming in 2009, a 9.2 per cent increase over the previous year, say CRTC financial results released Thursday. Total revenues for the private conventional broadcasters, which include CTV, Global, TVA and V, declined $17 million from $2.14 billion in 2008 to $1.97 billion in 2009. The decline was attributed to a 10.1 per cent drop in local advertising revenues from $387.2 million to $348 million over the same period. There was also a 10.3 per cent decline in national advertising revenues, from $1.47 billion in 2008 to $1.32 billion in 2009. John Douglas, a spokesman for CanWest Global, said in an interview that 2009 saw the largest decline in advertising revenues for the industry in 45 years. He said that reductions had to be made, which resulted in 659 job cuts for all private over-the-air broadcasters from 2008 to 2009. “We took out $60 million out of our operating costs, and that included 556 positions,” Douglas said. “It’s not surprising that we saw advertising revenues drop,” Norm Bolen, president and CEO of the Canadian Film and Television Production Association (CFTPA), told The Wire Report. “That was part of the economic downturn. Everybody knew that was going to happen.” But Bolen said he is disappointed with the growth in foreign programming while investment in Canadian programming fell by 3.3 per cent, from $619 million in 2008 to $599.4 million in 2009. “When your revenues are declining and you’re trying to solve your problem by spending more money on foreign programming, which is delivering you lower results, it’s really a fruitless exercise that eventually gets you nowhere,” Bolen said. “Today’s numbers tell the same story we’ve seen for the past 10 years. Canadian drama is dying while broadcasters feed their addiction to U.S. programming and cable companies are making obscene profits while ripping-off Canadians,” Stephen Waddell, national executive director of the Alliance of Canadian Cinema, Television and Radio Artists (ACTRA), said in a release Thursday. Duncan Stewart, director of technology, media and telecommunications research at Deloitte Canada, said much of the foreign programming increase from 2009 probably resulted from deals made in 2008, when the economic climate was brighter. “People were buying US programming when times were good, and that you’re committed to,” Stewart told The Wire Report. He added that it is easier to cut in-house Canadian programming that doesn’t carry contractual obligations. “It is generally believed that if you want to get lots of viewers and lots of advertising dollars, you have to show episodes of American reality shows, not quality Canadian drama about World War Two,” Stewart said. He said there is not enough data to determine whether it’s more profitable to air American programming over Canadian. But the CFTPA’s argument that cheaper Canadian shows can be more profitable because of the lower financial risks could hold merit, Stewart said. “The whole purpose of the Canadian broadcasting system is to champion Canadian content, and we’re seeing exactly the opposite of that happening,” Bolen said. The CRTC also released financial results Thursday for Canadian broadcasting distributors (BDUs), or the cable and satellite companies. The results painted a healthy picture for an industry where total revenues grew by $1.1 billion from 2008 to 2009, reaching a total of $11.4 billion last year. In 2009, the BDUs contributed a total of $352.4 million to Canadian programming, representing an increase of 8.3 per cent over 2008. The funding was divided between the Canadian Television Fund, independent funds, and money for local expression such as community television channels. On Monday March 22, the CRTC will arrive at its long-awaited decision on the fee-for-carriage issue, now re-branded as value-for-signal. Some observers speculate that the CRTC could force both sides of the debate to begin negotiations on the issue. CTV has proposed a regime based on the American system, in which stations that offer local programming elect to negotiate the terms of signal carriage from the BDUs every three years. If the parties can't agree, television stations could withhold their signals or the distributors could refuse to carry them. The CRTC would only play a mediating role to ensure good faith negotiating. “Legislators only get involved when people get their TV shows get cut off,” Stewart said. “That’s what’s happening in the US.” At a conference in Ottawa last month, CRTC chair Konrad von Finckenstein encouraged the broadcasters and distributors reach an agreement—one that does not necessarily involve the payment of fees. “The CRTC has to seize the opportunity on Monday and get this right, our industry and our culture won’t survive another ten years of letting broadcasters and big cable off the hook,” Waddell said in the ACTRA release. jmigneault@thewireport.ca

Foreign programming rises while broadcasters face largest drop in advertising revenue in 45 years

Broadcast | March 18, 2010

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